Palm Oil Internet Seminar

Section 2 : Global Palm Oil Market Focus:
Smallholders in Indonesia Palm Oil Supply Chain and BPDPKS Role
By: Mr. Dono Boestami

Mr. Boestami is currently the Chief Executive of BPDP KS (Oil Palm Plantation Fund Management Agency). Prior to joining BPDP KS in February 2017, Mr. Boestami was the CEO of PT MRT Jakarta from March, 2013 until October, 2016. He is responsible to get the first MRT project in Indonesia going, after being delay for 5 years. From 2011 to 2013 he was the CFO of PT Atlas Resources Tbk and from 2006 until 2011 was CFO of PT Bukit Asam (Persero) Tbk (PTBA). Prior to that, he was an Investment Banker for more than 10 years at Danareksa, Citigroup and Barclays Capital working on Corporate Finance, Debt Capital Markets, Securitization, and Mergers & Acquisitions transactions. He was originally a Commercial Banker with more than 10 year experiences, started his banking career with Bank Niaga. Mr. Boestami graduated from University of Wisconsin – Platteville with a B.Sc. in Civil Engineering and from Golden Gate University with a M.Sc. in Project & Construction Management.
Palm oil sector has significant contribution to Indonesia social and economy. The smallholder farmers are also key player in Indonesia palm oil sector as they share almost half of palm oil plantation, hence the development of the sector also depends very much on the productivity of the smallholder farmers. However, the productivity level of smallholder farmers in Indonesia is way lower compare to productivity of Big Corporation’s plantation. Lower productivity of smallholder farmers leads to the lower level of income and increase the risk of illegal land clearing. BPDPKS with Indonesian Government developed a comprehensive replanting program to increase smallholder farmers productivity and welfare as well as to reduce the risk of illegal land clearing. The program has been launched by President Joko Widodo in October 2017 and is targeted to cover 2.4 Million Ha land of smallholder farmers nationwide.

The complete presentation will include:

• The importance of Palm Oil Sector in Indonesia economy
• Role of smallholders in Indonesia Palm Oil Sector
• Challenges faced by smallholder farmers
• Government and BPDPKS solution to increase smallholder’s productivity and welfare
• The introduction of smallholders replanting program
• Opportunity and challenges in implementing replanting program for smallholders
• The financing scheme for smallholders replanting program
• Social and economy aspect during replanting program
• Supporting activities for replanting program
• Replanting Program target and way forward

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Questions & Answers (2) :
6 years ago
What mechanisms can be devised to buffer against growing market and price volatility and subsequent risk for smallholders and under which conditions do different mechanisms work best?
Dono Boestami:
We all know that for CPO we can not control the supply side but we can only control the demand side. Therefore, what we do is trying to create a sustainable demand. One method we are implementing is by using mandatory biodiesel program. We try to increase demand to other countries and also encourage or promoting the use of CPO based biodiesel. We hope China will soon implement their B5 biodiesel program. Indonesia already in B20 and going into B30 by 2025. Malaysia should do the same perhaps increase it to B15.
6 years ago
6 years ago
I understand that Indonesia does not have guidelines on how to grade FFB eg, Grade A, Grade B, Grade C. It is left to the FFB buyers to determine the price to be paid. How does Indonesia prevent the smallholders from being exploited in terms of the price for the FFB they sell?
Dono Boestami:
Price of FFB is regulated by Agriculture Minister Regulation 01/PERMENTAN/KB.120/1/2018. The price is set by Provincial Government using index base formula. In the attachement of the regulation you can find the details on how to grade the FFB. Unfortunately, I have yet find the translation of the regulation above. We also try to provide the farmers with information about the standard of the FFB and its price reference. In the future we plan to develop a price information mechanism that ca be distributed electronically to the small holders farmers also to potential buyers.
6 years ago
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